October 05,2004

Speech of U.S. Senator Max Baucus at the Trade Adjustment Coalition Luncheon The Trade Adjustment Assistance Reform Act of 2002: Lessons from the First Two Years

“I am pleased to be here today at the inaugural event of the Trade Adjustment AssistanceCoalition. I am honored to serve – along with Senator Coleman – as co-chair of the Board ofAdvisors. I want to commend Greg Mastel and Howard Rosen for their dedication to workerretraining. And for starting this worthwhile group. It will provide a much-needed public forumfor discussion and debate on the TAA program.

I want to thank everyone who is participating today – Congressman Phil English, TheaLee, and Sig Nilsen. But I particularly want to thank my colleague Norm Coleman. He has beena strong leader during his first two years in the Senate – on TAA and other issues. I enjoyworking with him.

The Rationale for Trade Adjustment Assistance

For 42 years, Trade Adjustment Assistance has served a single goal – to retrain tradeimpactedworkers and give them the skills they need to find new jobs. The rationale behindTAA is simple. When the government promotes trade liberalization, that decision hasconsequences. Overall, those consequences are positive. Job creation. New exportopportunities. Strong rules to level the global playing field. Lower prices. And greater choicefor consumers.

But there are downsides from trade. And when our national trade policy leads to joblosses in one sector, we have a responsibility to help displaced workers get back on their feet. Ina world where America’s global competitiveness depends on keeping ahead of the technologycurve, that means upgrading workers’ skills.

The TAA Reform Act of 2002

One of my proudest achievements as Chairman of the Finance Committee was passingthe Trade Adjustment Assistance Reform Act of 2002. This landmark legislation createdinnovative new benefits, and expanded eligibility to broad new categories of workers. After twoyears, it is time to take stock of how well these reforms are working.

That is why I joined Senator Grassley in requesting the GAO reports you will be hearingmore about later in the program. Frankly, the results are disappointing. Two years ago, wepredicted that TAA would enroll tens of thousands of workers under ne w eligibility provisionsfor shifts in production and secondary workers. Instead, new enrollment has been small.

We expected the vast majority of TAA participants to use the new health coverage taxcredit. So far, fewer than 6 percent of eligible workers have signed up. We introduced a newwage insurance benefit to help older workers get new jobs faster and cushion their income loss.Only a handful are actually participating.

The Problem

On paper, TAA provides a comprehensive web of benefits to help workers retrain and getback into the workforce. There are places we could tinker with the benefits around the edges.But in general, the package is sound and is rightly called the “gold standard” of federal retrainingprograms. We know TAA can work when workers get their benefits in a timely manner.

For example, I heard recently from a group of workers who lost their jobs at ColumbiaFalls Aluminum in Northwest Montana. Many had been at the plant for more than 20 years.They were using TAA benefits to retrain for a variety of new jobs. They told me TAA is alifeline and they didn’t know where they would be without it.

I was impressed by the dedication of the caseworkers at the Flathead Valley Job Service.They leave no stone unturned to make sure each worker gets the help he needs. I was touched byhow hard all these workers are trying – and how seriously they take their training. They want tosucceed in their new fields.

But many other deserving workers never make it into the system. So many that the Courtof International Trade has issued a string of blistering decisions condemning the Department ofLabor for turning down thousands of applicants for no good reason.

Now, I should take a second to note here that the Department of Labor was invited toparticipate today. They declined – and I frankly think that says a lot about their dedication tothis program.

Unequal Commitment

It is time to step back and ask ourselves – what is wrong with this picture? From mystandpoint, the answer is simple: lack of commitment. The TAA Reform Act was part of apackage with Trade Promotion Authority. Our country has made an enormous commitment totrade liberalization. We are negotiating free trade agreements with countries across the globe.

When it comes to trade adjustment, however, that same degree of commitment is sorelylacking.

The GAO reports provide a list of examples:

• Bureaucratic foot-dragging has deprived older workers of wage insurancebenefits Congress intended them to have.

• There has been no effort to find and help secondary workers after Congress madethem eligible for TAA.

• The Labor Department undercounts the number of workers who successfully findnew jobs – setting up this program to look like a failure.

• The administration is encouraging states to steer workers away from training inorder to cut costs.

• And finally, signing up for the health care tax credit is so cumbersome andexpensive most workers are turning down a 65% subsidy.

If USTR negotiated a free trade agreement that reduced tariffs on only half of U.S.exports – or protected patents and trademarks only part of the time – we would all call itunacceptable. Business and Congress would be outraged.

But we accept half measures on TAA every day. The TAA Reform Act was a promise toAmerica’s workers. A promise not to pursue the benefits of trade without helping those whoexperience its down side. As a government, and as a society, we are not doing a very good jobkeeping our promise.

Next Steps

We must do better. The longest to-do list is clearly for the Executive branch. But thereare contributions for Congress and the private sector to make as well.First, we must make sure eligibility criteria are interpreted broadly, as Congress and thecourts have instructed the Labor Department to do. Rules should not be applied like trapsdesigned to keep workers from qualifying.

Second, we need to promote training and pursue adequate funding for it. When weexpanded TAA eligibility, many of us fought against the administration and those who opposedTAA for better funding for training. Not surprisingly, states now face shortfalls. Butencouraging workers not to pursue training – as the Labor Department proposes – iscounterproductive.

Third, we should eliminate eligibility tests that serve only to limit participation in areaslike shifts in production, wage insurance, and the health coverage tax credit.

Fourth, the whole TAA program needs to be more transparent. I urge the Department ofLabor to make public its data on program participation and outcomes – data they now treat asheavily guarded secrets. And they should bring their web site into the 21st century by makingTAA decisions full-text searchable. The current system is so antiquated it acts as a barrier tosuccessful petitions.

Fifth, we should extend TAA to service workers, as Senator Coleman and I tried to doearlier this year. In 2003, about the same time as the Columbia Falls layoffs in NorthwestMontana, a nearby call center sent over a thousand jobs overseas. State officials did their best,but they simply couldn’t do for the call center workers what TAA allowed them to do for themanufacturing workers.

All those workers live in the same small community. All their job losses were related totrade. Try explaining to them why their stories turn out differently. It’s not fair. And it’s notgood policy.

Earlier this year, the Business Round Table and the Information Technology IndustryCouncil expressed support for the idea of extending TAA to cover service workers. Yet theadministration failed to support the amendment offered by Senators Cole man and Wyden tomake this happen.

Finally, we must adequately fund the TAA for Firms program, which helps small andmedium-d businesses become more competitive internationally so they can save and createjobs. Some of my colleagues in the Senate propose to cut funding to half the level we fought forin the TAA Reform Act. We must reverse this trend and fully fund this important programthrough the appropriations process.


Every day, business leaders tell me they need more well-educated and trained workers inthis country. TAA helps meet that need. It is our best program for helping American workers toupgrade their skills to the levels our employers demand. At a time when we are worried aboutAmerican jobs moving overseas, we shortchange this effort at our peril. If we do not raise theeducational level of our workforce, America’s long-term competitiveness is at risk.

TAA builds a better workforce. It helps compensate workers who bear the downside ofour trade policy. And it builds public and Congressional support for continued tradeliberalization. For a program that can and does mean so much, half- hearted measures are just notacceptable. It is time to show that trade promotion and trade adjus tment merit equalcommitment.”